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Four Public Affairs: Insights on Brexit (26/10/18)

Date: Friday 26th October 2018

Posted in:
EU News, Industry News

"A goal without a plan is just a wish"

Whereas the news cycle last week focused on the EU's alleged desire to 'annex' Ireland and the potential toppling of the Government - so just your average seven days in today's politics - this week saw a renewed interest in post-March plans. The 1922 Committee meeting and usual backstop discussions aside, the last five days have seen government departments across the board coming in for criticism about their lack of preparation.

Planning

This week we learnt that come November, the government will start issuing instructions to UK-based companies on the action they need to take in the event of a no-deal Brexit, irrespective of the progress of negotiations in Brussels. This is a shift from the previous technical notices, which simply warned businesses to review their needs and risks.

For some, this may seem symptomatic of a government that is woefully out of touch with the realities of the private sector. Most larger businesses will have been preparing their Brexit scenario planning and strategies for months, and many of those will already be in action (including, Four is pleased to see, Cadbury stockpiling its wares). That said, it is of course crucial that small and medium sized enterprises ensure they too are taking the necessary precautions, and soon.

In addition, deal or no deal, the Brexit preparation of government departments themselves have been scrutinised by the National Audit Office, whose report found that 11 out of 12 critical IT systems at the border are at risk of not being delivered on time and to acceptable quality. Similarly, details of the IT projects that BEIS was 'very confident' about delivering in time in April, are still to materialise.

Brexit secretary Dominic Raab also warned that government could not wait until the end of the year to implement its no-deal plans, saying November marked the deadline by which many had to be rolled out. While questions still abound about EU citizens' rights, IT systems, security, supply chains and medicine approval - to name but a few - it is still the uncertainty of any Brexit impact that is still doing the most damage to the government and economy.

People's Vote

100,000, 250,000 or 700,000 - whichever the number, a large number of protestors filled Parliament Square and the surrounding streets on Saturday, demanding a people's vote on the final terms of any Brexit deal. Meanwhile in Harrogate, a Leave Means Leave rally attracted an estimated 1,200 people.

Support for the vote came from the usual suspects across all political parties - Chuka Umunna, Anna Soubry, Sir Vince Cable and Nicola Sturgeon - while Lord Sugar and Adonis stood in their house on Thursday to make the case.

Despite the protest, May and the Government have ruled out a second referendum and Labour remain on the fence, 'keeping all options on the table' while arguing that another election is in fact the best way to bring the country together.

If a vote were to go ahead, the key issue would of course be the question itself. Should it offer the choice between the final Brexit deal and staying in the EU? Or should it also include a No Deal option? If so, should it use the alternative vote system or risk splitting the vote via proportional representation? And what would happen next? Does the UK forget the toxic politics of the last few years, and settle back into the bosom of the EU, or do we instead seek a Norway plus deal?

Brexit has highlighted some uncomfortable truths about divisions within our country, and while there is clearly a democratic case for the country having a say on the final Brexit deal - especially given the sub-par performance of the Government to date - we suspect that another vote would not solve the many issues that have reared their head over the last two years.

Budget

Looking ahead to next week we of course have the final budget before the official Brexit date, and while there's plenty of speculation about tax rises, we do know Hammond has been given a £13bn windfall from the Office for Budget Responsibility (OBR) due to the underestimation of the strength of tax receipts. We're expecting to see Hammond explain the £20bn boost to the NHS, the continuation of the fuel duty freeze, and an announcement on universal credit.

Of course, no government announcement is without its impact on Brexit discussions these days, and May is unlikely to let the Chancellor present an unpopular budget if at all possible. Rather, the OBR announcement provides Hammond with the opportunity to present the premise of a stable economy while holding out for a postulated 'deal dividend', whereby the markets are thought to bounce as they correct themselves from the fear of a no deal, postponed investments go ahead, and government won't need to spend billions on no-deal preparations.

Let's hope Hammond doesn't need reminding that the postulated deal dividend may only materialise if a deal is in fact done.